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Energy

Petrobras Seems The Winner in China’s $10 Billion Loan (PBR, SNP, XOM, CVX)

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By Douglas A. McIntyre Updated Published
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The $10 billion loan from the China Development Bank to Brazil’s Petroleo Brasiliero SA, known as Petrobras (NYSE: PBR), has been finalized.  This deal has been in our pending file since late February.  Many of yesterday’s reports had this as a fresh deal, which technically it is and technically it isn’t.  Under the deal, Petrobras will supply China Petrochemical Corp., known as Sinopec (NYSE: SNP), with 150,000 barrels/d for the first year of the deal and then 200,000 barrels/d for the next nine years.

You can compare the terms to what we noted back in February to see that this is not exactly a new award.  China does not receive any stake in any Brazilian oil field or any contracts for providing services in the oil fields. The loan carries an interest rate of 6.5% and will be repaid in cash, not oil. Sinopec will end up paying for the oil in cash too.

Fears that China will lock up all the world’s resources are not founded, at least in this deal. If anything, this loan looks like a better deal for Petrobras than for either the Chinese bank or Sinopec.  We had speculated that perhaps Exxon Mobil Corporation (NYSE: XOM) or Chevron Corporation (NYSE: CVX) could also toss money into the pot here.  If you consider investments and other liquidity along with cash, Exxon has about $50 billion sitting around and Chevron has over $30 billion sitting around.

Petrobras shares are up a bit more than 1% in the pre-market this morning, at $40.75, after a 2% rise yesterday. The company’s 52-week range is $14.73 to $77.61.

Paul Ausick
May 20, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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